‘Fed megaphone": Fed officials consider slowing or pausing tapering

Odaily Planet - Minutes from the Federal Reserve's January meeting show that officials discussed whether to slow or pause the drawdown of its nearly $6.8 trillion asset portfolio at last month's meeting, as they face the complexities of raising the federal debt ceiling in the coming months, according to ‘Fed megaphone’ Nick Timiraos. Complications. Developments related to the debt ceiling could lead to significant volatility in the Fed's liabilities. The tapering process will eventually deplete the banking system's reserves, and Fed officials are unsure how long this process will last. Currency market volatility triggered by how the Treasury will manage its cash balance could complicate the Fed's ability to determine the correct reserve balance. As a result, officials concluded at their January meeting that ‘it might be appropriate to consider a pause or slowdown in balance sheet reduction until the debt ceiling issue is resolved,’ according to minutes released Wednesday.